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GOLDBERG: Obama’s tainted bundler

After mislaying $1 billion, Corzine still trusted by president’s campaign

By Jonah Goldberg - -
Tuesday, April 24, 2012

Jon Corzine left Goldman Sachs with a net worth far exceeding even that of Mitt Romney today. Many accounts of his tenure at Goldman suggest he "failed up" the corporate ladder.

Pushed out of Goldman in a power struggle (sparked in part by his support for a government bailout of Long-Term Capital Management), he nonetheless pocketed somewhere between $350 million and $500 million when the company went public. He used the cash to buy himself a Senate seat, spending $62 million out of his own pocket.

After the Senate, he spent nearly $40 million of his own money to win the New Jersey governorship. While he was running for senator, the married-but-separated Mr. Corzine struck up a romantic relationship with Carla Katz, also married and head of Local 1034 of the Communications Workers of America. They broke up in 2004, but the flirting apparently never ended. In 2007, Ms. Katz and Mr. Corzine were both involved in negotiations over a state workers contract. In one email during that time obtained by the Newark Star-Ledger, Ms. Katz informs the governor, "BTW, I had an over the top erotic dream about you last night. Bad boy!"

Bad boy indeed. When the couple broke up, and after her union had endorsed Mr. Corzine and worked for his re-election, the governor's lawyers negotiated a settlement whereby he reportedly paid Ms. Katz more than $6 million and forgave a half-million-dollar loan he made to her when they were still an item.

When Mr. Corzine ran for re-election as governor, both President Obama and Vice President Joseph R. Biden Jr. stumped for him. Mr. Biden explained that from the moment he and the president sat down to figure out their economic strategy, "Literally, the first guy I called was Jon Corzine. It's not a joke. It's not a joke. First of all, he's the smartest guy I know in terms of the economy and on finance, and I really mean that."

Despite that ringing endorsement, Mr. Corzine lost his 2009 re-election bid to reformer Chris Christie. So Mr. Corzine went back to Wall Street, as chief executive of MF Global Holdings, a bond trading firm. A research note from the firm of Sander O'Neill Partners summarized what the street expected from Mr. Corzine: "We suspect that his contacts in Washington could prove useful as MF Global navigates a shifting regulatory environment."

Mr. Corzine proceeded to do exactly the sorts of things Wall Street has become infamous for: making crazy bets with other people's money, counting on governments to bail out the private sector and, allegedly, expecting to get friendly treatment from regulators. Gary Gensler, chairman of the Commodity Futures Trading Commission, was an old friend and colleague of Mr. Corzine's at Goldman Sachs and in Washington. Mr. Gensler had been a key aide to Sen. Paul Sarbanes and had reportedly worked closely with Mr. Corzine writing the Sarbanes-Oxley bill. At MF Global, under Mr. Gensler's watch, Mr. Corzine bet more than $6 billion on the European sovereign debt crisis, using borrowed client money. MF Global also apparently commingled client and company funds to pay off financial obligations, which is illegal.

Under Mr. Corzine, MF Global lost well over $1 billion, and I don't mean in the profit/loss sense. I mean it was physically misplaced and Mr. Corzine cannot account for where it went. The Justice Department is investigating, and news media accounts suggest a criminal prosecution is likely. Somewhat better late than never, Mr. Gensler recused himself after MF Global went bankrupt.

So, why the trip down memory lane? Because the Obama campaign just announced that Mr. Corzine is still on the list of top-tier bundlers for the Obama re-election campaign. Mr. Corzine has raised more than half a million dollars for Mr. Obama.

Mr. Obama is constantly denouncing "millionaires and billionaires" for playing by their own rules. It's true that the campaign told one reporter in February that it wouldn't take more money from Mr. Corzine himself, but it's been happy to let the man solicit donations for Mr. Obama even as Mr. Corzine is under investigation by Mr. Obama's own Justice Department. How cozy.

Tell me, what's the point of the Occupy Wall Street movement, and its countless sympathizers in the Democratic Party and the media, if that's good enough? Whatever happened to changing how Washington works?

We're about to enter a very long campaign in which where an apparently squeaky-clean Mitt Romney is going to be demonized for his success and dragged through the gutter. Meanwhile, Mr. Obama took cash from a true denizen of the gutter.

Jonah Goldberg is editor-at-large of National Review Online, a visiting fellow at the American Enterprise Institute and the author of the forthcoming book "The Tyranny of Cliches" (Sentinel HC, May 2012).